The U.S. begins a powerful commercial offensive against China. Biden announced this Tuesday a round of tariffs against the Asian giant to protect different sectors of his country from Chinese competition through “unfair practices”. This was announced by the White House itself in a statement. These new tariffs on rival products will include various imports, from semiconductors, batteries, solar cells, and critical minerals to electric cars.
One of the most striking changes is precisely the latter, which go from a tariff of 25% to 100%. In total, these new measures will have a total value of about $18 billion (€16.667 billion). Regarding the automotive industry, the U.S. government claims it wants to protect its industry from the massive arrival of cheap models from its rival and, with strong federal subsidies, ensure that its companies can orderly transition to electric vehicles.
These new levies will not all be implemented at the same time and, in fact, will be staggered, coming into effect between 2024 and 2026. The most aggressive will be electric cars with quadrupled tariffs. However, the rate on semiconductors will double in 2025, increasing from 25% to 50%. The reason given by the Biden Administration is that it is a central piece for the future of the global industry, so American production must be promoted.
Regarding critical minerals, a new tariff of 25% will be imposed. There will be an equal one for graphite and magnets, but it will not be applied until 2026. On the other hand, levies on lithium-ion batteries, a key component for electric cars, will increase this same year from 7.5% to 25%. The rest of the batteries not used for this industry will undergo the same movement in 2026. Tariffs on solar cells, key for the photovoltaic industry, will increase to 50% in 2024 from the current 25%.
These measures represent the largest tariff offensive by the U.S. since former president and current Republican candidate, Donald Trump, launched his ‘trade war’. After a ‘phase one’ agreement that seemed to mark the beginning of relaxation, the new steps have never materialized, and the measures imposed by Trump remain in effect, therefore, this new round of tariffs means escalating that underground conflict between the two world powers.
Indeed, these measures are now announced precisely due to a mandatory review that was coming to an end of the previous Administration’s tariffs. During the last year and a half, Biden had extended this review, and many analysts believed his idea was to postpone it until 2025, once the U.S. elections were over. Both candidates agree on the need to intensify trade restrictions with China, but Trump proposes a fixed tariff of 60% compared to Biden, who prefers to increase levies in strategic sectors.
Now it remains to be seen China’s response, a possibility that has been weighing from the White House for a while, fearing a resurgence of a trade war like the one experienced under President Trump. “We hope there is no significant response,” explained Treasury Secretary Janet Yellen. “Both President Biden and I have seen firsthand the impact of artificially cheap Chinese imports in the past and we will not tolerate it again.”
